Markets & Finance

Legg Mason Lowers Micros Systems to 'Hold'

August 27, 2003

Legg Mason downgraded Micros Systems (MCRS) to hold from buy.

Analyst Thomas Underwood says Micros, which supplies technology to the hospitality industry that includes touch-screen registers, reported good financial results. He says the company continues to sustain a strong balance sheet. He expects Micros to pay down its credit line over the next six months from cash generated from operations. He raised the $1.34 fiscal 2004 (June) earnings per share estimate to $1.50, and initiated a $1.90 fiscal 2005 earnings per share estimate.

Underwood notes shares trade at 25.1 times the fiscal 2004 earnings per share estimate; he thinks a recent run-up in the stock price is based more on momentum, and less on fundamentals. Therefore, due to recent stock price appreciation, he downgraded. Underwood has a $38 12-month target.